The Electronic Signature In Global and National Commerce Act is an Act that has been introduced to facilitate the use of digital or electronic records as well as signatures or eSigns in interstate level or foreign commerce.
This Act is also known as ESIGN, and it’s a federal law of the United States enacted by U.S. Congress. The law carried in the Act ensures that there is validity as well as legal effects within contracts that parties electronically enter into. The ESIGN Act was passed in 2000 and has been used to guide how an e Signature service provider serves consumers and how the consumers can protect themselves by understanding their rights.
Every state in the United States has at least a law that pertains to electronic signature, however, the federal law lays down the guidelines governing interstate commerce. In the first section (101.a.) the intent of ESIGN Act has been spelt out and it states that a signature or contract may not have its legal effect, enforceability, or validity denied solely because it comes in an electronic form. What this statement implies is that eSignatures or records are just as valuable and important as the paper equivalents and should receive the same kind of scrutiny in authenticity as happens to paper documents.
ESIGN Act Compliance
In order to determine whether eSignature service is complaint as stipulated in the ESIGN Act, it should look at the following essential requirements. If an eSign service provider covers these points, then you know that the eSignatures are authentic and enforceable within the United States.
1. Consent of doing business electronically
The parties involved in a transaction or agreement must agree that they will conduct the contract agreement or transaction electronically or through electronic means. You will find that eSignature tools will prompt users to confirm their consent to sign docs electronically. If a party does not agree to signing documents online, then you may want to agree on other kinds of methods for communication. The trust of an electronic signature may not have grown in every person or organization. Some organizations are still reluctant to use electronic signatures.
2. Intent of signing
Just like pen-and-paper signatures, the electronic signatures can only be said to be valid if the parties involved in the transaction or agreement intended to sign. You will find that the eSign service providers allow decline of signature requests so that they effectively allow the involved parties to make a decision as to whether they are willing to complete the agreement or transaction by use of the electronic signature.
3. Associating the signature with a document
An eSignature should be associated or connected to a specific document, which is being signed. This is done by indicating the process that was used to create the signature or creation of a textual or graphical statement that is added to the record signed.
e Signature services will not allow eSignatures to be sent to anyone without being part of a signed document and sent by the person who signs it, that's the signer. A user can choose to sign a doc by drawing his signature on the touchscreen of the device using a stylus or finger, or by placing an image of his signature on the doc. The user or signer can sign a document with the use of an existing template provided by the eSignature service providers.
Regardless of which method is used to sign the document, the eSignature is placed on the doc at the exact time it was signed. Important still, the software saves the signature as part of the document.
An eSign should be attributable to the individual who signs. The attribution of an eSign to an individual must be determined based on circumstances and context under which the signing of the document was done. There are various means to do the attribution, for example, documenting the actions and communications of the parties or even preserving an audit trial. An eSignature service will allow you to receive an individual copy of the document you signed as well as an audit trial intended for legal evidence, which may include device IP, Email ID, signature timestamp and others.
5. Retaining of Record
An electronically signed doc should be in an electronic record that can be retained by the recipient when they receive it. The information processing system, as well as the sender, should not prevent or inhibit the recipient's ability to print and store the digital record they receive for future reference.
An electronic document signature software will hold the original as well as the signed documents in a secure way using encryption like AES 256 or 256-bit SSL. The encryption needs to be provided for the documents when at rest and when they are being transmitted. A party can download the document that has been signed and store it in their preferred storage location including the space in their eSignature service provider. You also have the liberty to remove or delete the documents whenever you wish. For future reference, an audit trial is created for the parties.
Every time a document is signed, the eSign tool can carry out a detailed audit trial in which the trial goes from the email ID of the signer to the IP address of the device they're using and to the signature timestamp every time they do electronic document signing.
With studies indicating that companies that utilize digital solutions are more likely to be profitable than those who don’t use it, it means that digitization is the way to go. That being said, electronic signatures will represent one of the largest opportunities for companies to start using electronic signature solutions including eSignatures. The ESIGN Act steps in to cement, protect, and safeguard the process of carrying out electronic signatures so that parties involved are not exploited. The eSignature process has to be legally abiding otherwise, the users or parties getting into an agreement or contract or transaction may be left unprotected. Even the eSignature tools and service providers need to be governed by law so that they do not subject their clients to threats of electronic signatures.